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Learning activities are budgeted in a wide variety of ways, so the degree of estimating the costs will depend upon the organization you are working for. Generally speaking, the closer you are to your clients, the less you have to estimate. For example, a small Training & Development department located within a manufacturing facility might only have to justify its time and capital expenditures, while a training vendor will probably have to give a full development estimate before a training program is approved.
Budgeting training is often a difficult chore as plans are often based on training an "average person". But, as we soon learn, although there are many models and statistics of an average person to be found in various literatures, there are actually no average people to be found! We are all unique in some form or manner. This makes any activity that must place a variable on people highly uncertain and inaccurate at times.
Although the budget may not be correct the first time, especially if the training is new or complicated, it still should be performed at this time to give the training staff a goal to aim for. The budget or the program can be adjusted when more information has been obtained. After all, this is what the ISD model is all about, performing evaluations throughout the various phases and then using the feedback to adjust the program for the desired results.
After performing the initial budget, it might seem that the training program will be quite expensive, but Gary Wilber, CEO of Drug Emporium, Inc. said it best, "The expense isn't what it costs to train employees. Its what it costs not to train them. You realize that as you grow."
If it becomes evident that the resources to implement the best training strategy are not available, then it is important that all the personnel involved in the project are brought in on the decision making process. This includes both clients and training developers.
Training Cost Guidelines
Listed below are some various costs for estimating training costs. Remember, these are only estimates, as they will vary with experience, type of training, skill level, etc. After implementing a few training programs, you should adjust these estimates by taking into account your actual training costs. This is one reason for maintaining a well organized audit trail.
- Produce a video - $1,000 to $3,000 per-finished-minutes (PFM) depending upon concept, locations, talent, special effects, etc.
- Produce slides - $15 to $50 per slide
- Produce audio tape - $25 to $150 per minute
- Produce overhead transparency - $10 to $75 per transparency
- Student guide - four to eight hours development time to produce 1/2 to 2 pages
- Instructional Designer - $28.84 (based on salary of $60,000 per year)
- Management or Organization Specialist - ($38.46 based on salary of $80,000 per year)
- Outside Consultant or Specialist - $85.00 hour
To help with estimating costs of any learning program, use the Excel Spreadsheet Rough Cost estimator. This will help you get a very rough estimate.
Estimating Training Development Hours
Instructor Preparation (Dugan Laird, in "Approaches to Training and Development," (1985) Based on U.S. Civil Service estimate):
- Course is five days or less, then 3 hours of preparation for each hour of training.
- Course is between five and ten days, then 2.5 hours of preparation for each hour of training.
- Course is over 10 days, then 2 hours of preparation for each hour of training.
Development hours for specific learning initiatives:
One hour of classroom (instructor led) training (30 hours):
- Analysis - 4
- Design - 3
- Development - 16
- Evaluation and Revision - 7
Highly technical or poorly defined training: (45 hours):
- Analysis - 10
- Design - 9
- Development - 18
- Evaluation and Revision - 8
Self Contained Training for hand-off to other instructors (50 to 100 hours):
- Analysis - 12 to 24
- Design - 10 to 20
- Development - 19 to 38
- Evaluation and Revision - 9 to 18
Interactive Multimedia Instruction (IMI): 200 - 500 man-hours for each instructional hour of IMI. If your organization is inexperienced, expect your average developmental man-hours to be closer to 450-500 man-hours per instructional hour. The 1995 August/September issue of CBT Solutions Magazine reported that 221 hours was the average development time.
USMC Multimedia Guideline for Percentage of Development
| EVENT | PERCENTAGE OF TOTAL TIME
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| Prepare Project Plan | 2%
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| Conduct Course Content/Learning Analysis | 5%
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| Develop Instructional Media Design Package | 10%
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| Develop Prototype Lesson | 5%
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| Develop Flowcharts | 3%
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| Develop Script/Storyboards | 19%
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| Produce/Acquire Media (Photos, audio, video) | 13%
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| Author Course | 28%
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| Evaluate the Course (In-Process Reviews) | 15%
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Interactive Courseware (ICW) (Multimedia) (Computer Based Training CBT) (U.S. Navy Estimate):
- Category 1: Baseline Presentation. This is the lowest category of interactive courseware development. It is basically a knowledge or familiarization lesson, in linear format (one idea after another), used mainly for introducing an idea or concept.
Estimated Average Cost Per Hour Of Instruction - $1,901.00 to $2,170.00
- Category 2: Medium Simulation Presentation. Involves the recall of more information than baseline presentations and allows the learner more control over the lesson presentation.
Estimated Average Cost Per Hour Of Instruction - $3,768.00
- Category 3: High Level Simulation Presentation. This is the highest level category and includes aspects of categories 1 and 2 while using the full capabilities of interactive courseware. A high level of learner interactivity characterizes this level, with extensive branching capability. This level does, however, fall short of the use of artificial intelligence to guide presentations. This category is capable of real time event simulation.
Estimated Average Cost Per Hour Of Instruction - $7,183.00
Baseline estimate from which you can begin the process of determining the total number of hours it will take to design, develop, and evaluate one hour of ICW. The table shows a baseline estimate based on experience from Air Force ICW projects. The estimates are broken down into level of presentation and type of training. Program management time is included in the estimates. Estimated Hours of Development for One Hour of ICW Level of Presentation:
ICW (Interactive Courseware) Air Force Estimate:
| Type of Training | Knowledge | Skill | Attitude
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| I - Basic 30-200 hours | 30 | 75 | 200
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| II - Medium 75-250 hours | 75 | 125 | 250
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| III - High 200-600 hours | 200 | 400 | 600
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- Level I - Basic Presentation. This is the lowest level of ICW development in that Level I lessons are linear (one idea after another), and are used primarily for introducing an idea or concept. There is little "interaction" other than the student touching the screen or using a keystroke or mouse click to continue. The media used are primarily text and graphics (not complex).
- Level II - Medium Simulation Presentation. This presentation level involves the recall of more information than a basic Level I presentation and allows the student to have increased control over lesson presentation; that is, there is more interaction, such as using a light pen to rotate a switch. CMI is used in Level II lessons to track and analyze student performance. Level II normally combines audio, video, text, graphics and animation.
- Level III - High Simulation Presentation. This level involves aspects of both Level I and Level II while using the full abilities of ICW. Level III may present on screen interaction similar to that used in an aircraft simulator. This level provides a high degree of interactivity, extensive branching capability, maximum mediation opportunity (supports multiple levels of errors), real-time event simulation with minor equipment limitations, capability to interface with other output devices, and thorough CMI capability.
Seat Time
Seat time is the time spent by the learner in a learning environment. For many types of content, elearning clearly offers an advantage. The research generally shows that there is at least a 50% reduction in seat time when a course is converted from classroom learning to elearning. Brandon Hall reports it is a 2:1 ratio.
"Brandon Hall, editor and publisher of the Multimedia & Internet Training Newsletter, cites an overall 50 percent reduction in seat time required for a student to learn the same content using online training as compared to in a classroom (Puget Sound Business Journal)."
Of course, a lot of this has to with the type of content. For example, we normally read at least twice as fast as compared to someone speaking. Thus such courses as compliance training offers a seat time advantage due to rather than having an instructor do all the talking, we can now just read it. However, if we are practicing a new skill, then there is normally no real time advantage as we need the same amount of time to practice in an elearning environment as we do in a classroom.
eLearning Development Time
With most instructor led classes, a lot of the material is put into outlined form as it is expected that the instructor will fill in a lot of the blanks, such as integrating or leading the learning methods. With elearning, you have to put in all the content and get it to perform the learning methods by itself. Thus elearning has traditionally been a lot more expensive up front as it cost more to develop. However, the real savings come from other factors, such as travel, seat time, and administration costs. It generally takes at least four times as long to build elearning, than it does classroom training. Of course this depends on such factors as the tools you are using, learning methods, and what content you already have that are learner-friendly, rather than instructor-friendly.
If the elearning looks more like a PowerPoint presentation, then a 1:1 is probably close, however, the more elearning moves away from looking like a Powerpoint presentation and into a more interactive package, then the more the ratio starts to increase.
Development time to develop one hour of e-learning (The eLearning Guild, 2002):
- Simple Asynchronous: (static HTML pages with text & graphics): 117 hours
- Simple Synchronous: (static HTML pages with text & graphics): 86 hours
- Average Asynchronous (above plus Flash, JavaScript, animated GIF's. etc): 191 hours
- Average Synchronous (above plus Flash, JavaScript, animated GIF's. etc): 147 hours
- Complex Asynchronous (above plus audio, video, interactive simulations): 276 hours
- Complex Synchronous(above plus audio, video, interactive simulations): 222 hours
Case Study
Verizon Communications has been doing elearning for about three years. It takes them between 40 to 80 hours and costs $15,000 to $30,000 to develop one hour of elearning (George & Mcgee, 2003). This includes the instructional designer, project manager, and outsourcing fees (the instructional designer takes the content that is written in instructional design format to three other companies and an inhouse group for bids). The content comes from SMEs who explain to instructional designers how it is done (for example, installing DSL). If the employee has to perform hands-on activity, a simulation is programed.
They are now creating courseware in learning objects (they call them 'knowledge objects'). They use a content management system from OutStart. Verizon says once they develop enough learning objects, they will be able to build courses in five hours or less ($10,000 to $15,000) as they will only have to create one or two learning objects instead of an entire course of them. Their goal is that if someone requests a class in the morning, they will have it online that evening.
References
The eLearning Guild. (2002). The e-Learning Development Time Ratio Survey. Retrieved October 27, 2007 from http://www.elearningguild.com/pdf/1/time%20to%20develop%20Survey.pdf
George, T. & Mcgee, M. K. Educational Advantage. Information Week, March 10, 2003, pp. 57-58.
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